Missouri Man Indicted for $212,000 Social Security Fraud

David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that an Independence, Mo., man who was involved in the sovereign citizen movement was indicted by a federal grand jury today on charges related to a $212,000 Social Security fraud scheme.

Charles Daniel Koss, 62, of Independence, was charged in a five-count indictment returned by a federal grand jury in Kansas City, Mo.

Today’s indictment alleges that Koss received Social Security disability insurance payments to which he was not entitled between September 1994 and January 2010. According to the indictment, Koss concealed his work activity as a mortgage broker from the Social Security Administration. By willfully failing to notify SSA of the income derived from his work activity, Koss allegedly defrauded the government of approximately $212,768.

The indictment also alleges that Koss received a $250 economic stimulus payment for which he was not entitled. The American Recovery and Reinvestment Act (“Recovery Act”) of 2009 provided one-time payments of $250 to individuals who were or are found to be eligible for Title II Disability Insurance Benefits. Koss was not entitled to receive this $250 payment, the indictment alleges, because he was not entitled to receive Social Security disability payments.

Koss began receiving Title II Social Security Disability Insurance Benefits in 1987 for myoneural disorder and hypertension. In 1994, the indictment says, Koss began operating Embassy Mortgage, a real estate business, with his wife in Blue Springs, Mo. Koss was working as a loan officer and office manager for the business.

According to the indictment, when Koss learned that he would have to repay the government, he created a false negotiable instrument – which he called a “Registered Private Money Order” – purporting to draw on a bogus trust account held by the U.S. Treasury. He allegedly utilized the false negotiable instrument as payment for his debt and mailed it to the Social Security Administration.

Koss subscribed to what is known as the redemption theory, the indictment says, which claims that a “Birthright Trust” is created with the U.S. Treasury when parents of a newborn child pledge the child’s birth certificate to the government. Redemption theory involves bogus claims that when the United States government abandoned the gold standard in 1933, it pledged its citizens as collateral so it could borrow money. The movement also asserts that common citizens can gain access to funds in secret accounts using obscure procedures and regulations.

According to the indictment, adherents of the redemption theory sometimes call themselves “sovereign citizens.” The sovereign citizen movement is a loosely organized collection of groups and individuals who have adopted anarchist ideology. Its adherents claim that virtually all existing government in the United States is illegitimate and they seek to “restore” an idealized, minimalist government that never actually existed. Redemption theory and sovereign citizen beliefs are totally without merit and they have no basis in law or fact. Individuals often use these ideas to further various fraudulent schemes.

Koss is charged with two counts of theft of government money, one count of Social Security disability fraud, one count of passing a fictitious instrument with the intent to defraud, and one count of mail fraud.

Ketchmark cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Special Assistant U.S. Attorney Trey Alford. It was investigated by the Social Security Administration – Office of Inspector General, the Department of the Treasury – Inspector General for Tax Administration and the U.S. Postal Inspection Service.